Procedures for ensuring compliance with Securities Contracts
(Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (SECC Regulations) by Listed Stock Exchanges.
1. Regulation 45 of the SECC Regulations provides for listing of stock exchanges.
As per Regulation 45(2) of the SECC Regulations, the Board may specify such
conditions as it may deem
fit
in the interest of the securities market.
2. Accordingly, it has been decided to prescribe the following modalities so as to ensure compliance with the provisions of
SECC Regulations.
I. Ensuring holding of 51 per cent by public at all times by the listed stock exchange:
i. The listed stock exchange shall disseminate the details of its shareholding with
category
wise breakup (as per
the format specified vide SEBI Circular dated October 24, 2011), on
a continuous basis, on
its website. Similarly, the stock exchange where
the shares
are listed, shall also display the above
information.
ii. The depositories shall put in place necessary system to ensure that the shareholding
of
trading members or their associates and agents does not exceed 49 per cent. For this purpose, the depositories shall put in place systems for capturing the shareholding data of
trading members or their associates and agents and ensure that there is a
mechanism for coordination between the depositories towards sharing
of information. The depositories shall also monitor
the
aggregate shareholding limit of the trading members or their
associates and agents based on their demat balance, on a daily basis, at the end of the day. The stock
exchange where the shares are
listed shall share a list of all trading members or their associates and agents with the depositories to facilitate monitoring of demat balances.
iii.
The trading members or their associates and agents shall obtain
prior approval of the listed stock
exchange for further acquisition of shares, once
the aggregate shareholding
of
the trading members or
their associates and agents crosses the limit of 45 per cent. The trading members or
their
associates and agents shall refer to the shareholding pattern under the category
of
trading members or their associates and
agents, to determine/ascertain the
available head room
before placing the order.
iv. In the event of trading members or their associates and agents making
purchases without requisite approval as stated above, the depositories shall
initiate consequential action such as freezing of
voting rights and all corporate benefits in respect of such
shareholding till
the
time the same is divested.
v. The divestment of any excess shareholding beyond the specified limit would be through a special
window provided by the stock
exchange where the shares of the stock
exchange are listed.
II. Ensuring that all shareholders
are fit and proper:
i. In the pre-listing scenario, the exchange coming out with a public
offering shall include a declaration in the application form stating that the applicant is
fit
and proper in terms of Regulation 19 and 20
of
SECC Regulations, 2012.
ii. In the post listing scenario, the text of the applicable regulation with regard to fit and proper
shall be made part
of
the contract note.
iii. The listed stock exchange shall also undertake
all measures to make investors aware of the requirement of fit and proper criteria
for being its shareholders as specified in regulation 19 and 20 of
SECC Regulations.
iv. The listed stock
exchange
and
the stock exchange where the
shares are listed shall notify
on their websites that the shares of the listed stock exchange shall only
be
dealt by
fit and proper persons
as per
Regulation 19 and 20 of SECC Regulations.
v. In case of acquisition of shares by the person who is found not fit and
proper, the voting rights and all corporate benefits with respect to such shareholding shall be frozen by depositories until the same is divested through the special window.
vi. The listed stock
exchange shall submit to SEBI on a quarterly
basis an exceptional report regarding
the
shareholders
who are not fit and proper and action taken thereof.
III. Ensuring that shareholders holding
shares above 2 per cent are fit and
proper:
i. In addition
to
the
criteria mentioned at
para 2(II)
above, on
acquisition of shares above 2 per cent, provisions under Regulation
19(2) and 19(3) of SECC Regulations 2012 shall apply i.e. those acquiring more than 2 per cent shall seek approval of SEBI within
15 days of acquisition as per Regulation 19(2) and those intending to acquire beyond 5 per cent as per Regulation 19(3) have to seek prior
approval of SEBI.
IV. Ensuring shareholding threshold of 5 per cent or 15 per cent as the
case may be in
terms of SECC Regulations:
i. The depositories shall put in place
a mechanism to ensure that no
shareholder of listed stock exchange gets credit of shares beyond 5
per
cent or 15 per cent, as applicable. The depositories shall generate an alert
when such
holding exceeds
2
per
cent and monitor the same under
intimation to SEBI.
ii. The
Depository would inform the
listed stock exchange
as and
when
threshold
limit
is
breached and take
consequential
action
such
as freezing of voting rights and all corporate actions in respect
of
such excess holding till
the same is divested through the special
window.
3. The stock
exchanges,
both listed and where the
securities are
listed, and
depositories shall ensure that aforesaid mechanism be in place latest by March
31, 2016.
4. The stock exchange submitting application for listing of its securities to SEBI
shall ensure strict compliance with Chapter
VII
of SECC Regulations, 2012.
5. In view of the above, the recognised stock exchanges
are advised to:-
(a) make necessary amendments to the their bye-laws, rules or regulations, for incorporation of the above immediately;
(b) bring the provisions of this circular to the notice of its trading members and also to disseminate the same through their website ; and
(c) communicate to SEBI, the status of implementation of this circular in
the
Monthly Development Reports to SEBI.
6. This circular is issued in exercise of powers conferred under Section 11(1) and
11(2)(j) of the Securities and Exchange Board of India Act, 1992,
to protect the
interests of investors
in securities and to promote the development of, and to regulate the securities market.
7. This circular is available on SEBI website at www.sebi.gov.in.
Company Secretary GAURAV SHARMA+919990694230 Connect on Watts App with Gaurav Email us [email protected] Official Blog Fema India Experts Connect with our Facebook Page:- Click and Like our Page Subscribe our Email updates like other 13,300 Members, Free/Easy/Comfortableway
